88226967 Marketing Finance

8/10/2019 88226967 Marketing Finance

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Marketing Finance

PGDM/MMS (Marketing)

Semester III (2010-12)


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Marketing Finance: Sya!"s

I: S#$%S &%'%%:Saes &e*en"e as an integra eement +, c+st an

re*en"e . In*estment Frame+rk !y &M .

Management +, Saes &e*en"e . #naysis +,

re*en"e !y Pr+"cts errit+ries 3annes

"st+mers rers etc5 . #naysis +, marketing

c+sts !y tyes +, c+sts !y ,"ncti+ns signi,icance

+, marking c+st a+cati+n ,+r manageriaecisi+ns an its imitati+ns5


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Sya!"s

8 II : M#&9%IG I'%SM%:8 Management +, #cc+"nts &ecei*a!es anIn*ent+ries - reit Decisi+ns an reit P+icy- Secia Pr+m+ti+n an Marketing &esearc3

%enit"re . Marketing In*estments an t3eire*a"ati+n "sing t3e r+!a!iity t3e+ry anDecisi+n rees - %*a"ating &et"rn +nMarketing In*estment . De*e+ing ana"nc3ing ne r+"cts an t3e +ncet +,In*estment in $i,e yce +, Pr+"ct - #icati+n+, DF an inear r+gramming t+ e*a"atein*estments in r+"ct e*e+ment anmarketing r+"ct mi5


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Sya!"s8 III : P$I; D%ISIS #D M#&9%IG

FI#%:8 Pricing +, Fair Price S"!mitting +,teners ) . aicati+n +, DF tec3ni?"es t+!"geting . De*e+ing s"!-!"gets !y

marketing segments . #*ertising ="gets .="geting Saes F+rce %,,+rts . tim"m e*ean a+cati+n ,+r seing e,,+rts am+ng eaers .@@


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Sya!"s

8 @@De*e+ing c+maris+n ans ,+r saes ,+rce. !"geting sames . Bare3+"sing ecisi+ns .rans+rtati+n ecisi+n . Dei*ery &+"teecisi+ns . +st anaysis ,+r istri!"ti+n

aternati*es - Financia anaysis ,+r sitc3ing+*er ,r+m s+e seing agency t+ irect seing t+trae c3anne - imact +, marketing strategies+n +rganisati+na str"ct"re an esignc+nse?"ent ,inancia imicati+ns - +ncet +,

marketing c+st an *a"e . meas"ring *a"eae !y marketing e,,+rt5


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Sya!"s8 I':P&IIG D%ISIS:

8 arget Pricing . Pricing +, "rnkey Pr+


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O#her Re(erences ) *e&si#es8 153tt://5marketingteac3er5c+m/ess+n-st+re/,inance8 25 5!estmarketingtet!++k5c+m (Be!site +, t3e

#"t3+rs: #r"n 9"mar an 5Meenaks3i)8 75 3tt://5i!e,5+rg/3+me5as (Inia =ran %?"ity

F+"nati+n)E8 45 3tt://5iniac+re5c+m/ine53tm (Inia +re5c+m .

In,+rmati+n +n Inian In,rastr"ct"re an c+re sect+rs)8 A5 3tt://53ig3!eam5c+m/ (ig3 =eam &esearc3 .

&esearc3 artices +n *ari+"s +ics ,r+m *ari+"ss+"rces)

8 65 3tt://kn+5g++ge5c+m/k (#rtices +n *ari+"s

t+ics !y eerts ,r+m a +*er t3e +r)8 5 3tt://5ign+"5ac5in/re*yraers/y?Haers53tm("esti+n Paers +, IG)
http://www.marketingteacher.com/lesson-store/http://www.bestmarketingtextbook.com/http://www.ibef.org/home.aspxhttp://www.indiacore.com/index.htmlhttp://www.highbeam.com/http://knol.google.com/khttp://www.ignou.ac.in/prevyrpapers/pyq_papers.htmhttp://www.ignou.ac.in/prevyrpapers/pyq_papers.htmhttp://knol.google.com/khttp://www.highbeam.com/http://www.indiacore.com/index.htmlhttp://www.ibef.org/home.aspxhttp://www.bestmarketingtextbook.com/http://www.marketingteacher.com/lesson-store/


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O#her Re(erences ) *e&si#es8 J5 3tt://5marketing+er5c+m/Pages/e,a"t5as

(#merican Marketing #ss+ciati+n)8 K5 3tt://5irect-marketing-ass+ciati+n-inia5+rg/

(Direct Marketing #ss+ciati+n- Inia)8 105 3tt://5rmai5in/ine53tm (&"ra Marketing

#ss+ciati+n +, Inia)8

115 3tt://5anmanc+ns"ting5c+m/icmr/ine53tm(Inian +"nci ,+r Market &esearc3)8 125 3tt://5icrier5+rg/ine53tm (Inian +"nci ,+r

&esearc3 +n Internati+na %c+n+mic &eati+ns)8 175 3tt://5imr!int5c+m/ (Inian Market &esearc3

="rea" - IM&= Internati+na)8 145 3tt://5marketresearc3inia5+rg/ine53tmL ="siness De*e+ment ="rea" (Inia) P*t5 $t5
http://www.marketingpower.com/Pages/default.aspxhttp://www.direct-marketing-association-india.org/http://www.rmai.in/index.htmlhttp://www.planmanconsulting.com/icmr/index.htmlhttp://www.icrier.org/index.htmhttp://www.imrbint.com/http://www.marketresearchindia.org/index.htmlhttp://www.marketresearchindia.org/index.htmlhttp://www.imrbint.com/http://www.icrier.org/index.htmhttp://www.planmanconsulting.com/icmr/index.htmlhttp://www.rmai.in/index.htmlhttp://www.direct-marketing-association-india.org/http://www.marketingpower.com/Pages/default.aspx


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Ine t+ +icsS$+ No+ Name o( Topic S$i!e N'm&ers

, Mar-e#in% Finance an O.er.ie/ ,, ),0

1 Ro$e o( Mar-e#in% Dep#+ in Mar-e#in%Finance2 In#er!epen!ence o( Financean! Mar-e#in%

,3 ,4

0 In.en#or Mana%emen# an! Con#ro$ In#ro!'c#ion ,5 11

3 Acco'n#s Recei.a&$es Mana%emen#

*or-in% Capi#a$ Mana%emen#

10 61

60 65

7 Mar-e#in% Research 89 49

6 "ro!'c# "$annin% an! De.e$opmen#2"ro!'c# Li(e Cc$e2 E.a$'a#ion o(Bran!s E$imina#ion o( "ro!'c#s

4, ,17

8 Cos# ana$sis in Mar-e#in% Decisions ,16),37


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Ine t+ +ics@c+nt5

4 Mar%ina$ Cos#in% an! Brea-)e.enAna$sis

,36 ,66

5 "ricin% ,68 ) ,87


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$earning !


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$earning !


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$earning !


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$earning !


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Mar-e#in% Finance an O.er.ie/

Ac#i.i# Ana$sis:Pr+"ct an rae 3anne:

#rea Pers+n Peri+

Cos# Ana$sis:

Fie +st 'aria!e +st

+ta +st:


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;a$'e Ana$sis: S+cia +st =ene,it #naysisE

Marketing 'a"e #e5

B'!%e#ar Ana$sis:

&es+nsi!iity="geting (+st&e*en"e an Pr+,itentres)

#cti*ity ="geting

#n

Pr+gram ="geting

Peri+ ="geting:


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"ricin% Ana$sis :

"ro(i#a&i$i# Ana$sis:

&et"rn +n Saes (&S)E

&et"rn +n In*estment (&I)

&esae Price Management C+int an =y Pr+"ct

PricingE&I Pricing:

+st P"s Pricing

%+rt Pricing

$ane +st Pricing

+ntri!"ti+n Pricing


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&+e +, Mktg5 Det5 in Marketing Finance

(MF)

8 Re.ie/ Mktg5 +!


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&+e +, Mktg5 Det5 in MF

8 3ese may !e ea!+rate in i,,erent +rs:

Sec"re t3e !est +ssi!e rices ,+r t3e r+"ctEIenti,y segments +, markets 3ic3 i yie

3ig3 r+,it c+ntri!"ti+n an try t+ increase saesE

timise marketing c+stsE

Increase Saes &e*en"e er r"ee +,eenit"re +, #*ertising an Saes Pr+m+ti+nE

Increase Saes &e*en"e er Saes-aE

Increase t3e !ene,its reaise er r"ee +,eenit"re +, M&E

Pan t3e B re?"irement in terms +, In*ent+ry +,FG an &ecei*a!es5


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Mktg5 an Finance . Intereenence

8 3ese t+ eartments 3a*e a erenniac+n,icts +, interest5

8 Finance Det5 3as t+ "nerstan t3e

c+m"si+ns +, t3e Mktg5 eartment in itse,,icient er,+rmanceE

8 3e Mktg5 et5 as+ 3as t+ "nerstan t3ec+m"si+ns +, t3e Finance Det5 t+ s3+

+tim"m ret"rns +n t3e In*estments mae58 F+r eame@@


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8 3e *eraing areas:

Intr+"cti+n an +erati+n +, an e,,ecti*e="getary +ntr+ System in Mktg5E

Pr+"ct Panning inc"ing Pr+"ct seecti+nretenti+n an a!an+nment as e as i"ti+n inr+"ct +rt,+i+E

Pr+"ct ricing inc"ing !+t3 s3+rt-range an+ng-range ricing +icies an strategiesE

Mktg5 in*estment ecisi+ns inc"ingmaintaining t3eir imementati+n it3 s"ita!e,ee-!ack +riente c+ntr+ systems5


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%*a"ati+n +, Mktg5 Per,+rmance inc"ing !+t3genera an seci,ic Mktg5 ,"ncti+nsE

+ntr+ +, Mktg5 erati+ns . !+t3 t3e

em+yment +, ,"ns an t3e c+st +, in"tsan

F"ncti+na +st #naysis t+ ac3ie*e c+ste,,ecti*eness an as+ ,+r eercising a

systematic an meaning," c+ntr+ +*er Mktg5c+sts an eenses5


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In*ent+ry Management an +ntr+

8 In*ent+ry : &M BIP an FG

8 $e*e +, In*ent+ry is a,,ecte !y SaesPr+"cti+n an %c+n+mic c+niti+ns

8 In*ent+ry is t3e east i?"i +, t3e "rrent #ssets. s+ s3+" r+*ie t3e 3ig3est yie t+


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8 Firms s3+" ,in t3eir >&ig3t am+"nt t+ !ein*este in in*ent+ry .neit3er >+*er in*estmentn+r >"ner in*estment5

8 Finance Manager (FM) may 3a*e irect c+ntr+

+*er as3 Management an marketa!esec"rities

8 +ntr+ +*er In*ent+ry +icy is generays3are !y FM it3 t3e Pr+"cti+n Manager an

Marketing Manager (MM)8 P+icy +, #cc+"nts &ecei*a!e is s3are !y FMit3 MM


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8 + !asic c+sts ass+ciate it3 In*ent+ry : 3earrying +sts ( Interest +n ,"ns tieare3+"se sace ins"rance remi"m materia3aning eenses risk +, +!s+escence +r

eris3a!iity rai rice c3anges)) an t3erering +sts ( c+st +, +rering an r+cessingin*ent+ry int+ st+ck)

8 Im+rtant tec3ni?"es +, in*ent+ry management:

#= #naysisE#geing Sc3e"e an +-!in SystemE C"st in time (CI)5


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Decisi+n +n In*ent+ry e*e is !ase +n t3eSaes ,+recast r+"cts man",act"re !"sinessscenari+ an +*era +icy +, t3e c+many5

3ere is a trae-+,, !eteen t3e e*e +,

in*ent+ry an e,,ecti*e ,"ncti+ning +, t3e+rganisati+n5

#= #naysis: #n e,,ecti*e t++ +, in*ent+ryc+ntr+5 3r+"g3 #= anaysis eac3 item +,

in*ent+ry is categ+rise as # = +r eening+n its reati*e im+rtance


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&M: ="k isc+"nts +er +rering/trans+rt c+st

.s+ re"ce in*ent+ry carrying c+st ess risk +,

eteri+rati+n +r +!s+escence re"ce st+rage

sace an ess 3aning an ins"rance c+stE@@5

BIP: Sa,eg"ar against mac3ine !reak+ns

%c+n+mic r+"cti+n r"ns an +er mac3ine

setting c+sts .s+ re"ce in*ent+ry carryingc+sts an m+re e!+ r++m in t3e ,act+ry

remisesE


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+m+nent arts/c+ns"ma!es: Sm++t3 an"ninterr"te r+"cti+n r"ns .s+ re"cein*ent+ry carrying c+stsE

FG : =etter c"st+mer satis,acti+n an a cearincenti*e t+ saes eartment .s+ re"ce

in*ent+ry carrying c+sts ess risk +, eteri+rati+n+r +!s+escence an re"ce st+rage saceE

Packing materias: =etter reainess ,+r t3e saeset5 .s+re"ce in*ent+ry c+sts an r+tecti+n

against eteri+rati+n5


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#cc+"nts &ecei*a!es Management

8 De,ine >#cc+"nts &ecei*a!e- De!t +e t+ t3e,irm !y c"st+mers res"ting ,r+m saes +, g++s+r ser*ices +n creit in t3e +rinary c+"rse +,!"siness5 (Part +, m+ern c+metiti*een*ir+nment)

8 Firms se g++s +n creit t+ ac3ie*e t3e saestargets an kee t3e saes gr+ing5 3e as+inc"r s+me eenses +n creit saes5

8 reit eri+ etene !y t3e ,irms is a +icyecisi+n5


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#cc+"nts &ecei*a!es Management

8 &ecei*a!es reresent an im+rtant ma


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#cc+"nts &ecei*a!es@!


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#cc+"nts &ecei*a!es: reit P+icy

8 3e im+rtant imensi+ns +, a ,irms creit +icy are:reit StanarsE reit Peri+E as3 Disc+"nt

an +ecti+n Pr+gramme5

reit Stanars: riteria a+te !y a ,irm t+ eten

creit t+ c"st+mers5"antitati*e !asis ,+r setting stanars: reitratings creit re,erences #*5 +ecti+n Peri+(#P) an ,inancia rati+s5

Stanars may !e : (i) tig3t +r restricti*e (ii) i!era +rn+n-restricti*e5

3e trae-+,, is it3 c+ecti+n c+st e*e +, saes#P an e*e +, !a e!t +sses5


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- reit Stanars

8 %ame: Firms saes :&s5 100 mn5 "st+mers arerate 1 t+ 4 in escening +rer5 1 an 2 en


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- reit Stanars

8 #nser:8 3e e,,ect +, reaing creit stanars +n r+,it may

!e estimate !y "sing t3e ,+rm"a:

&I O QS(1-') - !nSR(1-t) - kI

B3ere &I O 3ange in &esi"a Inc+me ES O increase in saesE ' O rati+ +, *aria!e c+sts t+

saesE !n O !a e!t +ss rati+ +n ne saesE

t O ta rateE kO +st ta c+st +, caita an

IO Increase in recei*a!es in*estment5(OS#P'/760)


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- reit Stanars

&I O QS(1-') - !nSR(1-t) - kI

&I O Q(1Amn5 0520) . 05101Amn5R(1-054)

. 0510(1Amn540/76005J0)

O &s5 66665

Since t3e imact +, c3ange in creit stanars +n

&esi"a Inc+me is +siti*e t3e r++se

c3ange is esira!e5

06/04/12 7J

# t & i ! it P i


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#cc+"nts &ecei*a!es: reit P+icy- reit Peri+

reit Peri+: $engt3 +, time a+e t+ c"st+mers

t+ ay ,+r t3eir "rc3ases5 $engt3ening +, t3eeri+ "s3es saes " attracting ne c"st+mers5&e?"ires arger in*estments in recei*a!es anincience +, !a e!ts +sses5 S3+rtening +, t3eeri+ i 3a*e t3e ++site e,,ect5

%ame: # ,irm +,,ers 70 ays creit t+ its c"st+mers,+r t3e resent e*e +, saes +, &s5 A0 mn5 +st+, caita is 10 N an t3e rati+ +, *aria!e c+sts t+saes is 05JA5 3e ,irm is c+nsiering etening its

creit eri+ t+ 60 ays 3ic3 is ikey t+ "s3 saes" !y &s5 A mn5 3e !a e!t r++rti+n +naiti+na saes +" !e J N5 3e ta rate is 40N5B3at is t3e e,,ect +, engt3ening t3e creit eri+

+n t3e &esi"a Inc+me +, t3e ,irm


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-reit Peri+

#nser:

&I O Q

S(1-') - !n

SR(1-t) - k

IB3ere I O (#Pn. #Po)(So/760)

T '#Pn?S/760

#Pn O e a*5 +ecti+n eri+

#Po O a*5 +ecti+n eri+

So O Present e*e +, saes

(3ange in &ecei*a!es In*estment O Incrementain*estment in recei*a!es ass+ciate it3 eistingsaes Tin*estment in recei*a!es ,r+m t3e incrementa

saes)(F" saes rice is areay c+ecte +n t3e eisting saes

!e,+re t3e +icy c3ange an it in*ests +ny t3e*aria!e c+sts ,+r t3e ne recei*a!es)



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-reit Peri+

&I O QS(1-') - !nSR(1-t) - kI

B3ere I O (#Pn. #Po) (So/760)

T '#Pn?S/7605

&I O Q(Amn5051A) -050JAmn5R0567

. 0510L(60-70)A0mn5/760 T 05JA60Amn/760

O - &s5 2A005

Since t3e engt3ening t3e creit eri+ i res"t inre"cti+n in t3e &esi"a Inc+me +, t3e ,irm it isn+t a*isa!e t+ increase t3e creit eri+5


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# t & i ! it P i


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-as3 Disc+"nt%ame: 3e creit terms +, a ,irm are 1/10 net 705

Saes: &s5 J0 mn5E #PO 20aysE'O 05JAEk O 10NE t3e r++rti+n +, saes +n 3ic3c"st+mers c"rrenty take isc+"nt oO05A05 3e ,irmis c+nsiering reaing t3e terms t+ 2/10 net 703ic3 +" increase saes !y &s5 A mn5 re"ce t3e#P t+ 14 ays an increase t3e r++rti+n +,isc+"nt saes t+ 05J05 a rate is 40NB3at is t3ee,,ect +, reaing t3e isc+"nt +icy +n t3e gr+ssr+,it

#nser: 3e e,,ect +, c3ange in t3e isc+"nt +n t3e&esi"a Inc+me is gi*en !y t3e ,+rm"a:

&I O QS(1-') DISR(1-t) TkI

B3ere I O sa*ings in recei*a!es in*estment anDIS O increase in isc+"nt c+st5


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- as3 Disc+"nt

8 #nser:O Q&s5Amn5(051A) -K60000@R(1-054) T 0510116J0AA@

O &s5 -K1K45

Since t3e &esi"a Inc+me is re"ce e*en a,ter increasesaes c3ange in terms is n+t esira!e ,+r t3e c+many5

-------------------------------------------------------------------------------

U : DIS O n(So S)n- oSoo

O(5JJA000000502) . (5AJ000000501)

OK600005

I O So/760(#Po.#Pn) . ' S/760 #Pn

O (J0000000/7606) . 05JAA000000/76014

O&s5116J0AA5



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#cc+"nts &ecei*a!es: reit P+icy-

+ecti+n Pr+gramme

+ecti+n Pr+gramme: !


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M+nit+ring recei*a!es: S+me +, t3e meas"res:

m+nit+ring +, #*5 c+ecti+n eri+ (#P)E #geing

Sc3e"e (#S)E +n*ersi+n matri an F+at

anaysis5


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+ecti+n Pr+gramme

8 %ame: # ,irms saes is &s5 40 mn5E #P O20aysE 'O05J0E kO12N an !a e!t rati+ O 050A5

3e ,irm r++ses t+ rea its c+ecti+n e,,+rt 3ic3

i "s3 " t3e saes !y &s5 A mn5 increase t3e

#P t+ 40 ays an raise t3e =D rati+ t+ 05065 arate is 40N5 Fin t3e e,,ect +n t3e &esi"a Inc+me5

8 #nser: 3e e,,ect +, ecreasing t3e rig+"r +,

c+ecti+n r+gramme +n r+,it may !e estimate as

,++s:&I O QS(1-') - =DR(1-t) - kI

B3ere I O increase in in*estment in recei*a!es an

=D O increase in !a e!t c+st5


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+ecti+n Pr+gramme

&I O QA0000005 20 -05064A000000 T

050A40000000R 056

- 0512L 40000000/76020

TA0000000/760405J O-1400005

Since t3e e,,ect +n t3e &esi"a Inc+me is

negati*e it is n+t +rt33ie t+ rea t3ec+ecti+n e,,+rts5


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#cc+"nts &ecei*a!es: reit P+icy-reit

%*a"ati+n

8 reit %*a"ati+n : Pr+er assessment +, creitrisks is im+rtant as it 3es in esta!is3ing creitimits5

8 Generay t+ tyes +, err+rs +cc"r 3ie

assessing t3e creit risks5 3ey are :8 (i) # g++ c"st+mer is miscassi,ie as a ++r

creit risk . 3is eas t+ +ss +, r+,it +n saest+ g++ c"st+mers 3+ are enie creit

8 (ii) # !a c"st+mer is miscassi,ie as a g++creit risk - 3is res"ts in !a e!t +sses +ncreit saes mae t+ risky c"st+mers5

# t & i ! it P i it


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%*a"ati+n3ree met3+s "se : raiti+na reit #naysis

"merica reit Sc+ring an Discriminant #naysis5raiti+na reit anaysis:

+ creit+rt3y is t3e c"st+mer : 3e ,i*e s are:

3aracter (iingness t+ 3+n+"r +!igati+ns)E

aacity (a!iity t+ ay +n time . ,inancia sit"ati+n .+erating cas3-,+s)E

aita (+n in*estment in !"siness . stake)

+atera (Sec"rity +,,ere) an

+niti+ns (Genera %c+n+mic c+niti+ns)


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%*a"ati+n

8 #naysis +, Financia$ S#a#emen#s(& #& D/%&ati+ %=I/# &% &I etc5) +!taining &an-re(erences (,r+m t3e !anker +, t3e r+secti*ecient) an #naysis +, t3e (irms pas#

eperience (i, a ne cient 3at is t3eimressi+n +, t3e saesman 3+ g+t t3e cient)i g"ie in e*a"ating a +tentia creit+r .3et3er 3e is ikey t+ ay " 3is e!ts +n time

+r n+t5


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%*a"ati+n

8 "merica reit Sc+ring: Stes are:(i) 3e ,act+rs ree*ant ,+r creit e*a"ati+n are

ienti,ie an eig3ts are assigne t+ t3ese ,act+rs

t3at re,ect t3eir reati*e im+rtanceE

(ii) Beig3ts are assigne t+ t3ese ,act+rs t3at re,ectt3eir reati*e im+rtanceE

(iii) 3e c"st+mers are rate +n *ari+"s ,act+rs "sing a

s"ita!e rating scaeE

(i*) 3e ,act+r eig3ts an t3e ,act+r ratings are

m"tiie t+ get t3e ,act+r sc+re an

(*) 3e c"st+mers are cassi,ie !ase +n t3e rating

ine5


53/181

Fact+r

Fact+rBeig3t

&ating

Fact+rSc+re

A 4 7 2 1

Past Payment 0570 1520

P Margin 0520 05J0

"rrent &ati+ 0520 0560

D/% &ati+ 0510 0540

&% 0520 1500

&ating Ine 4500

Eamp$e:


54/181


%*a"ati+n

Finay a &isk assi,icati+n Sc3eme 3as t+ !e,+rm"ate !y t3e ,irm5 ne s"c3 eame +,&isk casses is as ,++s:

15 "st+mers it3 n+ risk +, e,a"tE

25 "st+mers it3 negigi!e risk +, e,a"t(e,a"t risk +, say ess t3an 2 N)E

75 "st+mers it3 itte risk +, e,a"t (e,a"trate !eteen 2 N an AN)E

45 "st+mers it3 s+me risk +, e,a"t (e,a"trate !eteen AN an 10N) an

A5 "st+mers it3 signi,icant risk +, e,a"t(e,a"t rate in ecess +, 10 N)


55/181

06/04/12 AA


reit Granting Decisi+n

8 reit Granting Decisi+n: reit +rt3iness +, t3er+secti*e cient is assesse5 S3+" t3e creit !e

+,,ere Decisi+n ree anaysis it3 assigne

r+!a!iities ,+r t3e i,,erent scenari+ i 3e in

taking t3e ecisi+n5(See Prasanna 3anra Pages 0-0J)

8 I, t3ere is a reeat +rer a,ter t3e ayment ,+r t3e

,irst +rer is recei*e it may !e ass"me t3at t3e

r+!a!iity +, t3e c"st+mers e,a"t is ess t3ant3at +, t3e ,irst +rer5 #gain "sing assigne

r+!a!iities a ecisi+n tree anaysis i gi*e

r+er g"iance in taking t3e ecisi+n t+ eten

creit5


56/181

06/04/12 A6


+ntr+ing recei*a!es

M+nit+ring/+ntr+ing t3e recei*a!es:

3e #P +r t3e Days Saes "tstaning

(DS) is a meas"re c+mm+ny "se t+

m+nit+r t3e ayment !e3a*i+"r +, t3ec"st+mers5 It is e,ine as : &ecei*a!es/

#*5 reit Saes er ay5

8 +nsier t3e ,++ ing e ame


57/181

06/04/12 A

8 +nsier t3e ,++ing eame:

Saes an &ecei*a!es Data

&s5 In ak3sM+nt3 Saes &ecei*a

!esM+nt3 Saes &ecei*a

!es

Can 1A0 400 C"y 1K0 740

Fe! 1A6 760 #"g"st 200 7A0

Marc3 1AJ 720 Setem!er 210 760

#ri 1A0 710 ct+!er 220 7J0

May 10 700 +*em!er 270 400

C"ne 1J0 720 Decem!er 240 420

8 DS at t3e en +, eac3 ? arter are as ,++ s


58/181

06/04/12 AJ

8 DS at t3e en +, eac3 ?"arter are as ,++s:

8 First r5: 720/(1A0T1A6T1AJ)/K0 O 62 aysE

8 Sec+n r5: 720/(1A0T10T1J0)/K1 O AJ aysE

8 3ir r5: 760/ (1K0T200T210)/K2 O AA aysE

8 F+"rt3 r5: 420/ (220T270T240)/K2 O A6 ays5

Be can +!ser*e t3at t3e +ecti+ns 3a*eimr+*e a itte5 I, t3e DS is it3in t3erescri!e n+rms t3en t3e +ecti+ns areeeme t+ !e "ner c+ntr+5

# t & i ! it P i


59/181

06/04/12 AK


+ntr+ +, &ecei*a!es

8 #geing Sc3e"e (#S):

assi,icati+n +,

+"tstaning recei*a!es

at a a gi*en +int +,time int+ i,,erent age

!rackets5

8 F+r eame:

#ge Gr+"(in ays)

Per cent&ecei*a!es

0-707A71-6040

61-K020

VK0A

# t & i ! it P i


60/181

06/04/12 60


+ntr+ +, &ecei*a!es

#S eicts t3e age-ise istri!"ti+n +, acc+"ntsrecei*a!e at a gi*en eri+ +, timeE

- 3es ienti,y c3anges in ayment !e3a*i+"r +,c"st+mersE

- can !e c+mare t+ creit eri+ eteneE

- #S !ey+n imits inicates 3ig3er r+!a!iity +,!a e!ts an is in,"ence !y t3e saes attern5

3e act"a #S is c+mare it3 s+me stanar #St+ etermine 3et3er t3e acc+"nts recei*a!esare in c+ntr+5

# t & i ! it P i


61/181

06/04/12 61


+ntr+ +, &ecei*a!es

8 +ecti+n Matri (+r +n*ersi+n matri): 3e DSan #S met3+s aggregate t3e saes an

recei*a!es +*er a eri+ +, time 5

8 ="t t3e ayment attern is n+t re*eae !y t3ese t+

met3+s58 3e +n*ersi+n matri met3+ (e*e+e !y

BG $eeen an & B C+3ns+n) s+*es t3is iss"e:

3e c+ecti+ns reaise in any m+nt3 + n+t ertain

3+y t+ t3at m+nt3 !"t s+me +, t3e re*i+"s m+nt3sas+5

# t & i ! it P i


62/181

06/04/12 62


+ntr+ +, &ecei*a!es

8 S+ t3e matri in t3is met3+ anayses t3e

ayment attern5 $++king at t3e c+n*ersi+n

matri +ne can


63/181

06/04/12 67


+ntr+ +, &ecei*a!es-+n*ersi+n MatriM+nt3 r5 Saes M+nt3y +ecti+ns

&s5 Can Fe! Marc3 #ri May

ct 10000 1200(12N)

+* K000 200(70N)

400(4N)

Dec J000 7000

(7JN)

2K00

(76N)

K00

(11N)

Can 6000 J0

(17N)

2A00

(42N)

2000

(77N)

20

(12N)

Fe! J000 --------- 1100

(14N)

2J00

(7AN)

7200

(40N)

K00

(11N)

# t & i ! it P i


64/181

06/04/12 64


+ntr+ +, &ecei*a!es-+n*ersi+n Matri

8 3e c+n*ersi+n matri met3+ is n+t eenent +nsaes e*e5

8 It ,+c"ses +n t3e key iss"e t3e pamen#s

&eha.io'r+

8 It ena!es +ne t+ anayse m+nt3-!y-m+nt3 ayment

attern as against t3e c+m!ine saes an ayment

atterns5

8 # imitati+n +, t3is met3+ is t3at it cann+t !e

reare +n t3e !asis +, "!is3e ,inancia

statements a+ne5 Interna ,inancia ata are

re?"ire5 ="t sti t3is met3+ is ess emaning +n

interna ata t3an t3e #S met3+5


65/181

Ac#i.i#ies F$oa#s


66/181

06/04/12 66

15 Saes I5 =iing F+at

25 Sening in*+ices t+ c"st+mers II5 Maiing F+at (1)

75 &ecei*ing In*+ices !y "st+mers III5 et reit F+at

45 De!t+rs sen c3e?"es I'5 Maiing F+at (2)

A5 3e +5 recei*es t3e c3e?"e '5 3e?"e Pr+cessingF+at

65 3e?"e is e+site int+ t3e !ank 'I5 =ank F+at (1)

5 as3 is mae a*aia!e t+ t3e c+5s!ranc3

J5as3 remitte t+ +, t3e +5 'II5 &emittance F+atK5 &emittance recei*e !y +, t3ec+5 an creite t+ its !ank acc+"nt5

'III5 =ank F+at (2)



67/181

06/04/12 6


+ntr+ +, &ecei*a!es . F+at #naysis

8 S+ e*en i, t3e c"st+mer r+mty remits t3e am+"nt

!y c3e?"e "e t+ t3e eay !"it int+ t3e system +,

t3e c3e?"e c+ecti+n r+cess !y t3e !anks Seers

are n+t a!e t+ "tiise t3e ,"ns immeiatey5

8 +e*er "e t+ t3e m+ern tec3ni?"es an

c+m"terisati+n +, !anking +erati+ns n+aays t3e

engt3 +, t3e c3e?"e c+ecti+n r+cess 3as !een

greaty re"ce5 (+re =anking S+"ti+ns .

#ny3ere !anking Direct De+sits +, 3e?"es !y

c"st+mers int+ t3e Seers =anks !ranc3es . at any

centre)



68/181

06/04/12 6J


+ntr+ +, &ecei*a!es

8 Imr+*ements re?"ire in t3e management +,

recei*a!es:

8 reit +icies nee t+ !e artic"ate in eicit

terms an re*ise eri+icay in t3e ig3t +,interna an eterna c3anges5

8 # r+er system 3as t+ !e e*e+e ,+r

c+ntin"+"s creit araisa an e*a"ati+n +,

creit+rt3iness +, c"st+mers5



69/181

06/04/12 6K


+ntr+ +, &ecei*a!es

8 3ere s3+" !e r+*isi+n ,+r >eceti+nre+rting eseciay in resect +, + an+*er"e +"tstanings s+ t3at s",,icient ana*ance arning signa can !e r+*ie !e,+re

t3ese !ec+me !a e!ts +r e!ts +, +"!t,"rec+*ery5

8 3ere s3+" !e !etter c++rinati+n !eteensaes r+"cti+n an ,inance eartments5

B+rking aita


70/181

06/04/12 0

B+rking aita

8 Im+rtance +, B management . It a,,ects t3e

&I in !+t3 ays : t3e aita em+ye as eas t3e &et"rn5 3ere,+re any imr+*ement in

t3e management +, B i a,,ect &I *ery

,a*+"ra!y . an *ice *ersa5

8 #n e,,icient manager +" try t+ ens"re t3at

t++ m"c3 +, caita is n+t circ"ating in t3e

!"siness in t3e ,+rm +, B n+r i 3e a+ t3e

B t+ ,a !e+ a artic"ar e*e . e i strikea !aance !y a care," st"y +, t3e m+*ements

+, B in s"ccessi*e eri+s5


71/181

B+rking aita

8 In*estment in # an t3e e*e +, $ 3a*e t+ !e

geare ?"icky t+ c3anges in saes5

8 Finance Managers sen a great ea +, time in

managing # an $ . arranging s3+rt-term,inancing neg+tiating ,a*+"ra!e creit terms

c+ntr+ing t3e m+*ement +, cas3 aministering

acc+"nts recei*a!e an m+nit+ring t3e

in*estment in in*ent+ries c+ns"me a great ea+, time +, ,inance managers5


72/181

B+rking aita

8 3ere is a c+se interacti+n am+ng B

c+m+nents5

8 # arge acc"m"ati+n +, FG may 3a*e t+

!e is+se +, t3r+"g3 i!era creit terms+r t3r+"g3 a a creit c+ecti+n r+cess5

8 # ,irms i?"iity cr"nc3 may !e s+*e

t3r+"g3 gener+"s isc+"nts +n its saes5


73/181

B+rking aita

8 3e im+rtant ,act+rs in,"encing t3e Bnees +, a ,irm are :

at"re +, !"sinessE

Seas+naity +, +erati+nsEPr+"cti+n P+icyE

Market c+niti+ns (c+metiti+n@creit

terms55)+niti+ns +, s"y (in*ent+ry +, ra

materias sares an st+res@)

Dan%ers o( #oo $i##$e *CDan%ers o(


74/181

06/04/12 4

Dan%ers o( #oo $i##$e *CDan%ers o(

#oo m'ch *C

+ntri!"ting ,act+r t+ !"siness ,ai"resManagement e,,iciencymay eteri+rate t3r+"g3c+macency

Fr"strates t3e enterrise +!


75/181

B+rking aita


76/181

06/04/12 6

B+rking aita

8 3e t3ree ,inancia rati+s 3ic3 are im+rtant in

keeing a c+nstant atc3 +n t3e Bmanagement : In.en#or T'rno.er Ra#io

Deors T'rno.er an! Cre!i#ors T'rno.er+

8 3e ,inance asect +, B management

essentiay means c+ntr+ing t3e c+st +, ,inance

in*+*e5 +st +, ,inance *aries acc+ring t+ t3e

i,,erent s+"rces +, ,inance5

8 ick t3e ic+n !e+ t+ see t3e +rking +, rati+s:

Microsoft Word

Document


77/181

06/04/12

Marketing &esearc3

8 De,initi+n !y #M#: M& is t3e systematicgat3ering rec+ring an anaysing +, ata a!+"t

r+!em reating t+ marketing +, g++s an

ser*ices5

8 9+ter: Systematic r+!em anaysis m+e

!"iing an ,act ,ining ,+r t3e "r+se +,

imr+*e ecisi+n making an c+ntr+ in t3e

marketing +, g++s an ser*ices5


78/181

06/04/12 J

Marketing &esearc3

8 &eca t3e stes in*+*e in M&:15Setting t3e "r+se +r +!


79/181

06/04/12 K

Marketing &esearc3

8 DECIDE mo!e$:8 D- De,ine t3e marketing r+!em

8 E- %n"merate t3e c+ntr+a!e an

"nc+ntr+a!e ecisi+n ,act+rs8 C- +ect ree*ant in,+rmati+n

8 I- Ienti,y t3e !est aternati*e

8 D- De*e+ an imement a marketing an

8 E- %*a"ate t3e ecisi+n an t3e ecisi+n

r+cess


80/181

06/04/12 J0

Marketing &esearc3

8 +st-=ene,it %*a"ati+n +, M&:8 In*estment in M& s3+" r+"ce eit3er

aiti+na re*en"e +r re"ce c+sts58 +sts +, M& are #c?"isiti+n c+sts an

erating c+sts 3ereas its *a"e is t3e "tiity interms +, r+,ita!iity an market s3are etc5

8 B'!%e# (or MR: 3e siWe +, t3e !"get is"s"ay !ase +n +ne +r m+re +, t3e ,act+rs:

3e >seing a!iity +, t3e M& 3ea instea +, t3e*a"e +, t3e ser*ices renere t+ t3emanagementE


81/181

06/04/12 J1

Marketing &esearc3

#m+"nt neee t+ meet +r !eat t3e tyica e*e+, eenit"re inc"rre !y t3e c+metit+rsE

t3e am+"nt t3at t3e c+many can a,,+r t+ sen. +!*i+"sy t3e !"get gets eane in g++

times an c+ntracte 3en !"siness c+niti+nsare tig3t an

="geting !ase +n s+me ,ie ercentage +,t3e t+ta marketing c+st !"get M& !eingargey a matter +, 3a!it5


82/181

06/04/12 J2

Marketing &esearc3

8 +ne +, t3ese !ases are ae?"ate t+ meett+ays nees5

8 3e c"rrent t3inking an ie++gy is t3at M&

s3+" !e regare as an in*estment an n+t aneense5

8 F+r meas"ring t3e e,,ecti*eness +, M& et

"se t3e ,+rm"a:

8 (>B+rt3 +r 'a"e +, Fining Pr++rti+n +,

cr"cia cases)/#nn"a M& ="get O &I


83/181

06/04/12 J7

Marketing &esearc3

8 3is is a g++ ar+ac3 t+ e*a"ate eenit"re

+n M& +n a 3ist+rica !asis5

8 ="t t3e imitati+n +, t3e ,+rm"a is t3at it +es n+t

r+*ie a !asis ,+r setting a !"get ,+r a ,"t"re

eri+ in 3ic3 t3e anticiate circ"mstancesmay !e ?"ite i,,erent ,r+m t3+se +, t3e

immeiate ast eri+5


84/181

06/04/12 J4

Marketing &esearc3

8 Fr+m t3e ,inancia ange t3e m+st +!*i+"s?"esti+n t3at arises is XB3at s3+" Marketing

Panning +stY

8 B Dickers+n +g"e 3as gi*en a sime ,+rm"a3ic3 is !ase +n t3e ass"mti+n t3at any

anning e,,+rt +" re?"ire certain am+"nts

an certain tyes +, aiti+na in,+rmati+n an

c+nse?"enty t3ere s3+" !e a c+st !ene,ite?"ati+n t+ eamine t3is 5


85/181

06/04/12 JA

Marketing &esearc3

8 3e ,+rm"a is :8 Z B,- B 3ere B O P' . P,FE

8 O c+st (a,ter taes) +, +!taining

in,+rmati+n5 +st inc"es eenit"re T++rt"nity c+st +, r+,its ,+reg+ne eit3er!eca"se +, man+er +n t3is r+


86/181

Marketing &esearc3

8 B (t3e eecte P' +, a an &e(ore a!!i#iona$in(orma#ion is co$$ec#e!>2

8 P O t3e eig3te a*erage +, a range +,s"!s"ccess +, a artic"ar an &ase! on a$$ #hein(orma#ion no/ a.ai$a&$e28 'O t3e eig3te a*erage +, a range +,

s"!


87/181

Marketing &esearc3

8 P, 1 . PE

8 F O t3e eig3te a*erage +, a range +,

s"!


88/181

Pr+"ct Panning an De*e+ment

3ater 11 +, = 9 3atter


89/181


8 Pr+"cts m"st !e anne . n+t neesE t3ey

s3+" se >!ene,its n+t ,eat"res5

8 &eca t3e i,,erent e*es +, a r+"ct- t3e

c+ns"mer 3ierarc3y !y 9+ter: +re =asic%ecte #"gmente an P+tentia5

P t P i D t


90/181


+ attri!"tes +, a r+"ct:8 P3ysica +r Meas"ra!e an

8 Psyc3++gica +r Percei*e5

Marketers try t+ e+it t3e ercei*eattri!"tes5

In t3e r+"ct-mi +, a marketer t3e reati*e

im+rtance +, eig3tage +, t3e i,,erentr+"cts a+ng criteria ike Saes Gr+ssMargin etc5 3a*e t+ !e ascertaine5

P t P i D t


91/181


8 9+ters ar+ac3 t+ Pr+"ct $i,e yce animicati+ns - t3e 3"man !eing an a r+"ct:

8 3e P$ c"r*e:

3i3++ . Intr+"cti+nE #"t3++ . Gr+t3EMan3++ . Mat"rity an %tincti+n . Decine5

3e 3aracteristics


92/181

S#a%es I II III I;

Saes $+ &ising Peak Decining+st/

"st+merig3 #*erage $+ $+

Pr+,it ega-ti*e

&ising ig3 Decining

"st+mers Inn+-*at+rs

%ary Mie .#+ters

$aggars.

Ma


93/181

S#a%esI II III I'

reate

Pr+"ct#areness

#n tria

Maimise

Market'a"e

Maimise

Pr+,it anDe,enMarketS3are

&e"ce

%enit"re



94/181


8 X3e engt3 +, t3e Pr+"ct cyce is g+*erne !yt3e rate +, tec3n++gica c3ange t3e rate +,

market accetance an ease +, c+metiti*e

entry5 =y an arge c+ns"mer r+"cts 3a*e

s3+rter i,e cyce 3ereas !asic in"stry +r

r+"cts g++s 3a*e +nger i,e cyce5Y .

C+e Dean5

3e >Diagn+sis an Pr+gn+sis tec3ni?"e isa+te t+ ,in t3e stage +, t3e i,e cyce 3ic3

a r+"ct is assing t3r+"g3 at a gi*en time5



95/181


8 In t3is tec3ni?"e si i,,erent c"r*es areran in a +gica se?"ence . as ,++s:

15 Saes re*en"e +, t3e artic"ar r+"ct ,+r

t3e ast ,i*e years +, t3e ,irmE

25Saes re*en"e ,+r t3e same eri+ as in 1

a!+*e ,+r 3e same r+"ct ,+r t3e

in"stry as a 3+eE75 Direct c+st +, seing ,+r t3e r+"ct +,

t3e ,irm ,+r t3e eri+E



96/181


45Pr+,it 3ic3 is t3e i,,erence !eteen saes

re*en"e (1 a!+*e) an c+st +, seing (7 a!+*e)5

(3is >Pr+,it is n+t t3e same as t3e c+n*enti+na

r+,it5)

A53e &I reating t3e Pr+,it (4) t+ t3e c+st +,in"ts +r in*estments as er 75

3e &I c"r*e an c+maris+n !eteen t3e t+

c"r*es as er 1 an 2 a!+*e i inicate

a"t3++ +r man3++ +r ecining state +, t3e

r+"ct an i as+ s"ggest necessary

c+rrecti*e acti+ns5



97/181


65#cti+n c"r*e inicating acti+ns re?"ire t+s"stain a"t3++ +r man3++ an re*ent

ecine5 3is c+" !e in t3e ,+rm +, m+re

res+"rce in"ts 3ig3er re*en"e t3r+"g3 !etter

ricing +icy etc5

3is tec3ni?"e s3+" !e a+te at reg"ar

inter*as say e*ery 6 m+nt3s ,+r c+ns"mer

r+"cts an e*ery t+ +r t3ree years ,+rin"stria r+"cts5



98/181


8 Disc+*ery +, ne "ses entry int+ t+tay ne

markets emergence +, ne c"st+mers aiti+n

+, ne ,eat"res@53ese are t3e t3ings t3at make

t3e P$ +, a r+"ct *ery "nreicta!e5

8 3e t3ree !r+a asects +, r+"ct anning:%+ring ne "ses +, eisting r+"cts .

Intr+"cti+n +, ne r+"cts - an r"ning +r

3asing +"t +, eak r+"cts5

Generay e+ring ne "ses +, eisting r+"cts

is a negecte area in marketing5



99/181


8 =++W #en an amit+n 3a*e ienti,ie t3e,++ing tyes +, ne r+"cts :

(i) e t+ t3e +r r+"cts-an entirey ner+"ctE

(ii) e r+"ct ines . entering an esta!is3emarket ,+r t3e ,irst timeE

(iii) #iti+n t+ eisting r+"ct ines . s"ementc+manys eisting r+"ct inesE



100/181


(i*) Imr+*ement/re*isi+n t+ eisting r+"cts .imr+*e er,+rmance an greater ercei*e

*a"eE

(*) &e-+siti+ning . eisting r+"cts targete t+ne markets ne c"st+mersE

(*i) +st re"cti+ns . nes r+"cts r+*iing

simiar er,+rmance at re"ce c+st



101/181


8 3e r+"cts ne t+ t3e +r . as in (i) -in*+*et3e greatest risk an t3e ast +ne as in (*i)

in*+*es t3e east risk5

8 It is essentia t+ ienti,y ne ++rt"nities antake a*antage +, t3e sit"ati+n !y e*e+ing

ne r+"cts . since t3e eisting r+"ct range

i s++ner +r ater !e in a ecining stage in t3e

i,e cyce



102/181


8 riteria in e Pr+"ct Decisi+ns:

Searc3 ,+r synergy - marketing s"iers

c"st+mers tec3n++gica e?"iment

man+er@

searc3 ,+r +rt,+i+ e,,ectEsearc3 ,+r sta!iityE searc3 ,+r sec"rityE

P$ c+nsierati+nsE *ertica seciaisati+n

an segment m+*ements5



103/181


8 Stages in e Pr+"ct e*e+ment:,irst in,+rmati+n a!+"t ne r+"ct ieasEcrei!iity c+"ntE matc3ing +, +!


104/181


8 Financia %*a"ati+n +, a =ran:

i recenty a !ran as assesse in ?"aitati*e

terms +ny . ike !ran reca aareness

+siti+ning etc53e ,inancia *ie +, a !ran in terms +, >!ran

e?"ity is a recent 3en+men+n5

%arier M[#s ere +ne ,+r t3e "r+se +,

getting 3+ +, an esta!is3e !ran5



105/181


8 +aays it is *ery c+mm+n t+ see M[#s !eing+ne at a m"tie +, many m+re times t3e*a"e +, t3e ac?"irees assets +r a ,e times t3emarket *a"e +, its s3ares5

8 reating a !ran ,r+m scratc3 is c+sty time-c+ns"ming an risky an s+ it is easier t+ in*estin an eisting an esta!is3e !ran5



106/181


8 3r+"g3 ac?"iring a !ran t3e ac?"irer a*+is,"t"re c+metiti+n5

8 3e ac?"isiti+n rice

O *a"e +, t3e tangi!e assetsT rice +, t3e !ran

Tc+st +, re*enting t3e !ran ,r+m

g+ing int+ t3e c+metit+rs 3ans5



107/181


8 S"ggesti+ns ,+r t3e ,inancia treatment +, >!rane?"ity:

'a"e +, a !ran is an >asset an can !e

ereciate year a,ter yearE'a"e +, a !ran s3+" !e ritten +,, against t3e

a*aia!e reser*es an s"r"s5

="t 3at a!+"t t3e *a"es +, t3e !rans internay

create . B3et3er t+ s3+ t3at as an asset ani, s+ 3en an at 3at *a"e



108/181


8 3e c+nse?"ences +, n+t *a"ing t3e internaycreate !rans are:

t3e ,irm "ner*a"es itse,E

its +n s3are3+ers are misin,+rme an s+may se t3eir s3ares +"t at ess t3an t3eir rea+rt3E

n t3e +t3er 3an e*en i, t3e ,irm *a"es itsinternay create !rans t+ re,ect t3e tr"eec+n+mic *a"e it may !e treate as>s"!


109/181


8 3e +t3er iss"es:

+ m"c3 +, t3e a*ertisement eenses 3as

g+ne t+ars !ran !"iing

+ m"c3 3as g+ne t+ars ac3ie*ing saes in t3e

s3+rt r"nIn t3e case +, an ac?"isiti+n !ran *a"ati+n is a

,"ncti+n +, t3e "timate "r+se +, t3e ac?"isiti+n5

3ere,+re t3e *a"ati+n ,r+m t3e ac?"isiti+n +int +,

*ie is ikey t+ !e i,,erent ,r+m acc+"nting +int

+, *ie an t3e *a"e +" !e c3anging

c+nstanty5



110/181


8 3"s t3ere are c+nstant c+n,icts !eteen t3e,inance an marketing r+,essi+nas in resect

+, !ran *a"ati+ns5

83ey s3+" 3a*e m"t"a resect an try t+"nerstan t3e c+mm+n +!


111/181


8 Met3+s ,+r !ran *a"ati+n:in terms +, c+sts . ist+ric c+st i5e5 estimate

act"a c+st +, creati+n +r ac?"isiti+n +, a !ranOR &eacement c+st i5e5 estimate c+st

+, reacing an eisting !ran !y an ienticane +ne t3r+"g3 creati+n +r ac?"isiti+nE

#cc+ring t+ market rice i5e5 t3e rice t+ !i +ray ,+r ac?"iring a !ran e esta!is3e in t3e

marketE#cc+ring t+ +tentia earnings5



112/181


8 F+rm"ae ,+r cac"ating t3e =rans *a"e:

(a) 'a"e +, t3e !ran

O \ (t O 1 t+ ) &=#/(1Tr)]#

&esi"a 'a"e/(1Tr)N 3ere &=# #nticiate re*en"e in year t

attri!"ta!e t+ t3e !ran an r O isc+"nting

rate5

&esi"a *a"e !ey+n year O &=N /(r-g)

3ere g O &ate +, re*en"e gr+t35



113/181


8 (!) 3e M"tie met3+:

P/% O Market *a"e +, %?"ity/9n+n Pr+,its

=ran M"tie O =ran %?"ity/=ran et Pr+,its



114/181


8 Pr+"ct %iminati+n: Sick an eak r+"ctss3+" !e eri+icay eiminate58 It is +!ser*e t3at t3e marketers + n+t ay

m"c3 attenti+n t+ t3is "e t+ t3e reas+ns:

It is easier t+ a r+"cts t3an t+ eiminateEIt is i,,ic"t t+ eete yesterays g++

r+"cts - it is a sa ecisi+n t+ art it3 +an trie ,riensE

%ectati+n t3at t3e eak r+"ct mig3t +e in ,"t"re it3 c3anges in t3e marketc+niti+nsE



115/181


# t3+r+"g3 anaysis is re?"ire !e,+reeiminating any r+"ct5

a*ing t++ many items "ner t3e *arie tyes +,r+"cts is "nesira!e5 It in*+*es s"!stantia3ien c+sts ine,,iciencies an +sses ike:

++ many r+"cts@aste +, 3ysica an,inancia res+"rces (3ig3 "nit c+st +, r+"cti+n3ig3er c+sts +, are3+"sing an istri!"ti+n@)

SiWea!e art +, r+m+ti+n eenses g+ing

asteE Interna c+metiti+n . r+"ct canni!aisati+nBaste +, manageria time an attenti+nE

# r+"ct 3ic3 3as +"ti*e its "tiity s3+" !e

merciessy r"ne (. kie)



116/181


8 + t+ ienti,y t3e eak r+"cts ,+reiminati+n F+r t3is e 3a*e t+ c3eck t3e

r+"cts as t+ 3+ t3ey er,+rm5

8Pr+"ct-Market %*a"ati+n:8 " r o ! ' c #

Ne/ O$!M

a

r-

e

#

o

$

!

N

e/

1 2

7 4



117/181


8 Pr+"cts s3+" !e "t in t3e resecti*e?"arants: s+me ,+rm"a is: " t+ 7 years +

,+r c+ns"mer r+"cts an ,i*e years ,+r

in"stria r+"cts5

8 e "se +r aicati+n +, an + r+"ct may !e

c+nsiere as a ne r+"ct5

8 Determine t3e ercentages +, t+ta saes an

t+ta gr+ss margin earne !y eac3 gr+"58 n anaysis +, t3e ,ig"res ,+r t3e ?"arants

s+me in,erences may !e ran ike :



118/181


8 I, t3e ?"arant 1 s3+s at east a 2AN +, t+ta

saes +r GP Margin t3en it may !e c+nsiere

t+ !e satis,act+ry5

8 I, t3e ?"arant 4 s3+s siWea!e ,ig"re +, say

AN +r m+re in terms +, saes +r GP Margint3en t3e c+many may !e 3eaing t+ars

sickness5 It s3+s ++r marketing e,,ecti*eness5

S+ t3e ,ig"res +, t3e ?"arant 4 s3+" !e

minim"m58 Pr+"cts in ?"arants 2 an 7 s3+ generay

satis,act+ry marketing e,,ecti*eness5



119/181

Pr+"ct Panning an De*e+ment8 &et"rns-Margin Matri:

Re#'rn

i%h Lo/

, 1

7 4

M

A

R

G

I

n

i

%

h

$

+

(&et"rn: Marketing &I an Margin: et Marketing Margin)



120/181


8 3e c"t-+,, rates ,+r eac3 may !e ,ie at t3e

meian +, Marketing &I an MM resecti*ey5

8 #,ter t3e r+"cts/ r+"ct gr+"s are cassi,ie int+

t3e ,+"r s?"ares s+me s"ggeste c+nc"si+ns may

!e as ,++s:

8 "arant 1: satis,act+ry-retain t3e marketing miE

8 "arant 2: "t c+sts a


121/181


8 Ieay a marketer s3+" try t+ 3a*e as manyr+"cts as +ssi!e in t3e "arant 1 an as

,e r+"cts as +ssi!e in "arant 45

8 ++ many r+"cts in "arant 4 +int t+

insiient sickness +, t3e c+many5



122/181


8 P$: In"stry *is-^-*is t3e ,irm:

In"stry

C

o

m

p

a

n

In#ro!'c#ion Gro/#h

Ma#'ri# Dec$ine



123/181


8 P+ssi!e in,erences are as ,++s:8 In"stry an c+many a"nc3: $eaers3i

stat"sE

8 In"stry gr+t3 - +many a"nc3: G++ !"t

m+nit+ring re?"ireE8 In"stry mat"rity - +many a"nc3: + !e

etremey care," as t3e sit"ati+n is ,ra"g3t it3angerE

8 In"stry ecine . +many a"nc3: G+ sa*et3e c+many5



124/181

8 =G M+e:

&eati*e Market S3are ig3 $+

?

as3 +s

D+gs

X

A

n

n

'

a$

Ma

r

-

e

#

Gr

o

/

#

h

i%

h

L

o

/



125/181

g

8 ?s: =ring #D c+ns"me m+re cas3E8 as3 +s !ring m+re cas3E

(S+ t3e +5 s3+" try t+ 3a*e m+re as3 +ss+ t3at t3e cas3 can !e "se t+ n"rse anc+n*ert t3e s 3ic3 are >Pr+!em 3iren t+?s5)

, c+"rse s+me i g+ t+ >D+gs 3ic3 take a +t+, managements time an attenti+n an as+,inancia an +t3er res+"rces +, t3e c+many53e >D+gs may 3a*e t+ !e eiminate5



126/181

g

8 It 3as !een +!ser*e !y =G gr+" t3at t3eirect man",act"ring c+sts +, t3e s an t3eas3 +s are reati*ey +5

8 +maris+n +, a t3e ,+"r m+es: Pr+"cts in

?"arant 1.3ig3y satis,act+ryE ?"arant 4 .etremey ++rE (3ese are t3e m+st ikeycaniates ,+r r"ning)5

8 So Sic-ness as /e$$ as #he Reco.er s#ar# a#

#he Mar-e# p$ace+ Financia$ ra#ios ma (in!#he e((ec#s no# #he ca'ses+



127/181

g

8 Pr+"ct-ise r+,ita!iity anaysis: 3is 3es in:8 ienti,ying t3e m+st r+,ita!e r+"ctsE

8 a+cating ,"ns a*aia!e ,+r ,"t"re in*estmentsE

8 maintaining c+se c+ntr+ +*er c+st5Pr+"ct-ise r+,its may !e meas"re !y

c+maring t3e saes re*en"es +, eac3 r+"ct

it3 t3e c+sts ass+ciate it3 its r+"cti+n

seing an istri!"ti+n5



128/181

g

8 3ere are t+ ar+ac3es ,+r t3is anaysis:

+ntri!"ti+n ar+ac3 an #!s+rti+n c+stingar+ac35

8 3e +ntri!"ti+n ar+ac3 re?"ires t3e segregati+n

+, a c+sts int+ t3eir ,ie an *aria!e c+m+nents

an tracing t3e *aria!e c+m+nents t+ t3e ini*i"a

r+"cts5

8 3e #!s+rti+n +sting ar+ac3 traces a c+sts -

,ie an *aria!e . t+ t3e ini*i"a r+"cts5 S+ t3isar+ac3


129/181

g

8 ick t3e ic+n !e+ t+ see t+ eames,+r a cear "nerstaning:

Microsoft Word

Document



130/181

g

8 In rea i,e sit"ati+ns ,+r arge c+manies 3a*ingi*ersi,ie r+"ct range an +erating t3r+"g3

a arge n"m!er +, saes an istri!"ti+n +"tets

t3e i*isi+n/r+"ct gr+"/r+"ct-ise anaysis

is m+re c+micate5

8 +m"terisati+n 3es . !"t t3e ar+riate

r+grammes 3a*e t+ !e in ace5 ( an "

s"ggest t3e ata t3at 3as t+ !e c+ecte ,+r t3ein"ts)



131/181

8 3e r+s an c+ns +, t3e Pr+,ita!iity anaysis:

"ros Cons

es t3e mgt5 t+ ienti,y t3e gr+t3sect+rs an t3e eak areas in t3e mktg5

+erati+ns- e+y its res+"rces ,+r

+tim"m res"ts an imr+*e t3eer,+rmances +, t3e eak +nes

+ anaysis can reace


132/181

g

8 S+ e can c+nc"e t3at r+,ita!iity statementsanaysis s3+" !e "se +ny as a g"ie ,+r

+!taining "se," in,+rmati+n in anning

ar+riate meas"res ,+r imr+*ing t3e

er,+rmance +, r+"cts5

+st anaysis in Marketing Decisi+ns


133/181

8 Managements at i,,erent e*es 3a*e t+ take aie *ariety +, ecisi+ns . s+me +, t3em"nr+gramme an +t3ers r+gramme +rreetiti*e5

8 3e >"nr+gramme are "ni?"e . eames: at3e caita eenit"re ecisi+ns5

8 &eetiti*e ecisi+ns 3a*e t+ !e taken ateri+ic inter*as in resect +, reetiti*e asects+, !"siness . eames: a*ertisement meia

seecti+n eense anning in*ent+ry n+rmsricing ecisi+ns +tim"m r+"ct +r saes mietc5

06/04/12 177



134/181

8 XM+ern Management s3+" !e intereste n+ts+ m"c3 in recent ecisi+ns as in t3e ,"t"rity +,

t3e resent ecisi+ns 5Y . Peter Dr"cker5

8 # systematic anaysis +, ast ata +"

e,initey +,,er a g++ g"ie t+ t3e ecisi+n

maker5

8 B3ie making ecisi+ns t3ere are n+n-,inancia

+r ?"aitati*e ,act+rs as+ 3ic3 eig3 3ea*iyt3an t3e ,inancia ,act+rs5

06/04/12 174



135/181

8 3e "r+se +, c+st anaysis in marketing isessentiay t+ generate an r+*ie ,inancia an?"antitati*e ata t+ ecisi+n makers t+ ai animr+*e t3e ecisi+n making r+cess5

8 # r+er anaysis +, marketing c+sts ais in t3e,++ing:

Determinati+n +, t3e marketing c+sts +, eac3r+"ct s+ t3at 3en t3ey are c+m!ine it3r+"cti+n c+st ata r+"ct-ise r+,ita!iity

can !e +rke +"tE+ntr+ +, marketing c+sts t3r+"g3

esta!is3ment +, !"gets an e*a"ati+n +,managers acc+ring t+ t3eir c+st res+nsi!iitiesE

06/04/12 17A



136/181

#naysis +, c+sts in*+*e in ser*ing i,,erentcasses +, c"st+mers an i,,erent areas t+etermine t3eir reati*e r+,ita!iity

+m"tati+n +, s"c3 ,ig"res as c+st er saesca c+st er +rer c+st t+ inc"e a nec"st+mer +n t3e !++ks etc5

Decisi+n making in regar t+ saes s"c3 asseing t3r+"g3 i,,erent c3annes +, istri!"ti+nseing in i,,erent markets an regi+ns

etermining r+"ct r+,ita!iity ,+r i,,eringe*es +, r+m+ti+na eenses t+ c3++se t3e!est +ssi!e met3+ +, saes r+m+ti+n an s++n5



137/181

8 Marketing +st #naysis is +ne in t+ stages:8 (i) +sts are initiay recassi,ie ,r+m t3eir

acc+"nting 3eaings int+ ,"ncti+na c+st gr+"s

in s"c3 a ay t3at eac3 c+st gr+" !rings

t+get3er a t3e c+sts ass+ciate it3 a artic"ar

acti*ity in marketing t3e r+"ct5

8 (ii) 3ese ,"ncti+na gr+"s are t3en a+cate t+

c+ntr+ "nits (i5e5 r+"cts c+ns"mer gr+"sc3annes +, istri!"ti+n) "sing reas+na!e

!ases5



138/181

8 3e ,"ncti+na anaysis +, marketing c+sts may

!e as ,++:Direct seing c+st . Saesmens saary

c+mmissi+n tra*eing entertainment etc5

#*ertisement an saes r+m+ti+n c+st . meiaa*ertisement cata+g"es an !r+c3"res

Market researc3 . c+st +, in-3+"se researc3

c+st +, researc3es carrie t3r+"g3 +"tsie

agencies etc5Distri!"ti+n c+st . trans+rtati+n are3+"sing

an st+rage ins"rance etc5


139/181



140/181

F+r eame:

Saesmens Saaries : Direct c3arge

Saesmens c+mmissi+n: Saes "rn+*er

Saes ,,ice %enses: "m!er +, rers

#*ertising: Genera: Saes "rn+*er

#*ertising Seci,ic: Direct c3arge

Packing/Dei*ery %enses/Bare3+"se %enses

: +ta *+"me +, r+"cts s+

reit c+ecti+n eenses: +5 +, +rers06/04/12 140


141/181


( ,ii t i t


142/181

(rer ,iing c+sts: rer r+cessing c+st

are3+"se eenses FG in*ent+rycarrying c+sts trans+rt c+sts acking

eenses c"st+mer ser*ices eenses

reairs "ring arranty etc5 rer ,iing

c+sts er "nit +, +"t"t i increase it3

t3e increase in *+"me +, saes )

06/04/12 142



143/181

Fie an *aria!e c+sts:

Marketing Fie +sts: Saes Managers/

Saesmens saaries saes +,,ice eenses

are3+"se rent5Marketing 'aria!e +sts: Saesmens

c+mmissi+n acking an trans+rtati+n

eenses

Marketing Semi *aria!e c+sts: 3e generaaministrati+n eenses5

06/04/12 147



144/181

+st e,,ecti*eness anaysis: + im+rtantaicati+ns:

ne is t3at y+" can ,in t3e c3eaest means +,

acc+mis3ing a e,ine +!


145/181

&ee*ant c+st anaysis: as ie aicati+ns in

t3e areas +, intr+"cti+n +, ne r+"ctsr+ing r+"cts c3anging t3e r+"cti+n

r+cess intr+"cing mec3anisati+n t+ reace

man"a +rk5 B3ie r+ing a r+"ct +r

r+"ct ine a art +, t3e ,ie c+st mig3t cease

t+ eist a,ter t3e ine is r+e 3ie a art +, it

may !e inc"rre an s3are !y +t3er r+"ct

ines5

06/04/12 14A



146/181

06/04/12 146

"erio! "ro!'c#ion


147/181

8 3e t+ta estimate c+st ,+r t3e entire i,e +, t3e

r+"ct O &s5 AJ00005 S+ t3e a*erage c+ster "nit O &s575A25 S+ taking int+ c+nsierati+n

t3e r+"cts t+ta i,e san +, A years ricing at

a!+"t &s5 4 i 3e t3e c+many t+ enter t3e

market an make m+ney t++5

8 Intr+"cti+n +, a ne r+"ct: in t+ ,+rms: (i)

ine etensi+n r+"cts an (ii) ne r+"cts +r

r+"ct ines8 In t3e case +, ine etensi+n r+,ita!iity +"

!e t3e incrementa c+ntri!"ti+n as t3ere is n+

ikei3++ +, aiti+n t+ ,ie +*er3eas506/04/12 14



148/181

8 (ii) In t3e case +, ne r+"ct ine t3e reata!e

,ie c+st 3ic3 arises irecty +"t +, t3eintr+"cti+n +, t3e ne r+"ct ine +" 3a*e

t+ !e e"cte ,r+m t3e initia c+ntri!"ti+n t+

arri*e at t3e net incrementa c+ntri!"ti+n ,r+m

t3e ne r+"ct ine5 3is incrementac+ntri!"ti+n can !e taken as t3e r+,it since t3e

+t3er genera ,ie c+sts +" 3a*e !een

rec+*ere t3r+"g3 t3e sae +, +t3er eisting

r+"cts5

06/04/12 14J



149/181

8 =asis ,+r t3e ,+recasts:Saes: Market s"r*ey/Market researc3E

'aria!e c+sts: eisting c+st str"ct"re an c+st

!e3a*i+"r in resect +, simiar r+"cts in t3ec+many/+t3er c+maniesE

Fie +sts: aacity r++se ,+r

r+"cti+n/marketing (ereciati+n +n t3e

aiti+na ,ie assets interest +n aiti+na+rking caita@)

06/04/12 14K



150/181

8 Dr+ing a r+"ct +r r+"ct ine: ere t3e+!


151/181

06/04/12 1A1

Sa$es 79 69 39 ,79 79 69 ,,9

Con#ri&'#ion 17 13 4 78 17 13 35

Direc# Re$a#a&$e Fie! Cos# 3 7 0 ,1 3 7 5

Genera$ Fie! Cos#,9 ,1 4 09 ,3 ,6 09

"ro(i# ,, ,5 ,7 8 0 ,9

In t3is case t3e r+ing +, +es n+t imr+*e t3e +*era

r+,ita!iity t3+"g3 as a +ss making r+"ct5 3et+ta r+,it c+mes +n !y A 3ic3 as t3e net c+ntri!"ti+n

+, 5



152/181

8 S+ t3e ecisi+n r"e may !e:

(i) # r+"ct s3+" n+t !e r+e as +ng as t3e

c+ntri!"ti+n earne !y it is ae?"ate t+ c+*er t3e

irect c+sts reata!e t+ t3e it 5

(ii) Genera ,ie c+sts an c+mm+n eenses3ic3 cann+t !e sa*e e*en a,ter a artic"ar

r+"ct is r+e 3a*e n+ r+e t+ ay in t3e

ecisi+n . t3e t+ta am+"nt in*+*e s3+" !e

segregate an c+nsiere t+ !e t3e eenses+, t3e c+many as a 3+e 3et3er t3e r+"ct

is r+e +r c+ntin"e506/04/12 1A2

Margina +sting an =reak-e*en #naysis


153/181

8 Margina +sting: is t3e tec3ni?"e +,

segregating ,ie an *aria!e c+sts an arri*ingat t3e c+st 3ic3 +" *ary in r++rti+n t+ t3e

*+"me +, r+"cti+n +r saes5 (Margina c+sting

an margina c+st are as+ kn+n as irect

c+sting an irect c+st)

8 Fie c+sts are "na,,ecte !y *ariati+ns in t3e

*+"me +, +"t"t (,+r a artic"ar range +,

acti*ities5)8 'aria!e c+sts are t3+se t3at ten t+ *ary irecty

in reati+n t+ t3e *+"me +, +"t"t506/04/12 1A7



154/181

8 s"ay irect materias irecty c3argea!eeenses an a art +, t3e +*er3eas c+nstit"te

t3e t+ta *aria!e c+st er "nit5

8 Margina c+st +, r+"cti+n i c+nsier +ny t3e

*aria!e c+sts reate t+ man",act"ring

+erati+nsE

8 B3ereas Margina c+st +, saes i as+ inc"e

t3e +st-man",act"ring *aria!e c+sts ,+r seingan istri!"ti+n acti*ities5

06/04/12 1A4



155/181

8 3ere are as+ +t3er tyes +, c+sts . 3ic3 aresemi-,ie an semi-*aria!e c+sts5

8 Semi ,ie c+sts: %ames are s"er*isi+n

ereciati+n +n s3i,t +erati+ns etc 3ic3

increase in stes "t+ a certain etent t3erea,ter

5

8 Semi *aria!e c+sts: 3ese *ary !"t n+t in

r++rti+n t+ r+"cti+n +r saes . may !e at a+er rate +r at a 3ig3er rate5 %ames: +er

tee3+ne c3arges etc5

06/04/12 1AA


M i ti t 3 i


156/181

8 Margina +sting tec3ni?"e rec"es any

a+rti+nment +, ,ie c+sts am+ngr+"cts5 Fie c+sts are treate as

eri+ c+sts +, t3e !"siness an are

c+nsiere searatey in arri*ing at t3er+,its +, t3e !"siness5

8 3e t+ta r+,it +, a !"siness may c3ange

merey !eca"se +, a c3ange in t3e saes-mi 3ie a +t3er ,act+rs remain

c3ange506/04/12 1A6

3ree Scenari+s . c3anges in t3e saes mi5Scenario , Scenario 1 Scenario 0

A B C A B C A B


157/181

06/04/12 1A

A B C A B C A B

ni#s So$!)$a-hs, 1 0 0 , 1 , 3

1Con#ri&'#ion per 'ni# Rs+37 19 09 37 19 09 37 19 70

To#a$ con#ri&'#ion Rs+$a-hs37 39 59 ,07 19 69 37 49 70

Con#ri&'#ion ('n! o( #he&'siness

,87 1,7 ,77

To#a$ (ie! cos# o( #heB'siness Rs+ $a-hs

87 87 87

To#a$ "ro(i# o( #he B'siness

Rs+ $a-hs

,99 ,39 49

This eamp$e sho/s #ha# #here is no necessi# #o appor#ion #he (ie!

cos#s amon% #he pro!'c#s as $on% as o.era$$ pro(i# is main#aine! or

impro.e! as in Scenario 1+



158/181

8 /S &ati+: +ntri!"ti+n t+ Saes rati+ (as+

kn+n as P/' rati+- Pr+,it '+"me rati+-

e*en t3+"g3 it is n+t t3e rati+ +, r+,it t+

t3e *+"me)

8 I, t3e saes rice is &s5 100 an t3ec+ntri!"ti+n is &s5 40 t3en t3e /S rati+n

O 054 +r 40N

8 &eca t3at in a re*i+"s eame e3a*e +rke +"t t3is rati+5

06/04/12 1AJ



159/181

8 +ntin"ing t3e re*i+"s eame i, t3e

saes rices +, t3e t3ree r+"cts are &s5100 40 an K0 an t3e margina c+sts are

&s5 AA20 an 60 resecti*ey t3en t3e

/S rati+s are 4ANA0N an 77577N58 In t3is case ,r+m t3e saes rice +int +,

*ie t3e +rer +, re,erence +, t3e

r+"cts +" !e # an =5 B3ereas,r+m t3e /S +int +, *ie it s3+" !e

=# an 506/04/12 1AK



160/181

8 =reak-e*en +int is t3e +ne at 3ic3 t3e t+ta

c+ntri!"ti+n e?"as t3e t+ta ,ie eenses s+t3at t3ere is neit3er r+,it n+r +ss5

8 3e i,,erence !eteen t3e act"a +r r+


161/181

8 3e =reak-e*en (=/%) +int in "nits : O +ta ,ie c+st/ nit c+ntri!"ti+n5

I, t3e ,ie c+st is &s5 20 ak3s an t3e "nit

c+ntri!"ti+n is &s5 40 t3en t3e =/% +int+, saes in "nits O A00005

3e =/% in saes *a"e

O Fie c+st/(/S rati+)

O &s520ak3s/40N O &s5 A0 ak3s in t3eeame5



162/181

8 St"y t3is eame ,+r "nerstaning +, t3ec+ncets:

8 Saes an et Pr+,it: 1st ?r: &s570ak3s an 2

ak3sE 2n?"arter: &s5 40 ak3s an 6 ak3s5

Fin: S rati+E Fie c+st er ?"arterE =% saes

*a"e ,+r t3e ?"artersE Margin +, sa,ety ,+r t3e

?rs5E saes re?"ire in ?r57 t+ earn a r+,it +, &s5

10 ak3s an Pr+,it eecte "ring ?r54 gi*ent3e saes ,+recast ,+r t3e eri+ O &s5 4A ak3s



163/181

8 #nser: Since t3ere !een net r+,it in !+t3t3e ?"arters t3e saes e*e 3as areaycr+sse t3e =% e*e an t3e r+,itaiti+n is +ny "e t+ t3e c+ntri!"ti+n

8 +maring t3e t+ ,ig"res +, t3e ?rs5 It iscear t3at t3e r+,it +, aiti+na r+,it +,&s5 4 ak3s is t3e c+ntri!"ti+n ,r+m t3e

aiti+na saes +, &s5 10 ak3s53ere,+re t3e S rati+ O 054 +r 40N5



164/181

Since S rati+ is 40N ,r+m t3e ,irst ?r5Fig"re e can eri*e t3e ,ie c+st as :

c+ntri!"ti+n(7054)-r+,it 2 O &s5 10 ak3s

=% saes Fie c+st/+ntri!"ti+n rati+ O &s510ak3s/054 O &s5 2A ak3s

Margin +, sa,ety in ?r5 2 O &s5 40-2A ak3s

O &s5 1A ak3s



165/181

8 Saes re?"ire in ?r iii t+ earn a r+,it +,&s5 10 ak3s :

+ntri!"ti+n re?"ire O ,ie c+st &s5 10

ak3s T Pr+,it &s5 10 ak3s i5e5 20 ak3s53ere,+re t3e re?"ire saes

O &s5 20 ak3s/c+ntri!"ti+n rati+ 054

O &s5 A0 ak3s5



166/181

8 Pr+,it eecte "ring t3e ?r5 I* i, t3esaes ,+recast is &s5 4A ak3s:

3e c+ntri!"ti+n +" !e &s5 4A ak3s054

O &s5 1J ak3s5 3ere,+re t3e r+,it +"!e &s5 1J ak3s-,ie c+st &s5 10 ak3s

O &s5 J ak3s5


=% i ti t it ti


167/181

8 =% in a m"ti r+"ct sit"ati+n:

Saes(&s5ak3s)

+ntri!"ti+n (&s5ak3s)

Pr+"ct /S

rati+

Pr+"

ctise

C'm'$

a#i.e

"ro!'c#

/ise

C'm'$a#i.

e

# A0N 10 ,9 7 7

= 40N 20 09 4 ,0

20N 20 79 3 ,8



168/181

8 +m+site /S rati+ O1/A0O74N8 +ta ,ie c+st is gi*en as &s5 J5A ak3s

8 3ere,+re t3e c+m+site +r c+m!ine =%

saes *a"e O &s5J5A ak3s/0574O &s5 2A ak3s

Simiary =% "nits as+ can !e +rke +"t

as ,++s: Fie +st/Beig3te a*eragec+ntri!"ti+n er "nit


I 3 ! i i


169/181

8 In t3e a!+*e eame aiti+na ata are as

,++s: nit saes ,+r t3e r+"cts #= an are2 ak3s 4 ak3s an 4 ak3s

nit Saes .&s5ak3s

+a Saes&s5ak3s

ni#"rice

ni#Con#ri&'#ion)Rs+

*ei%h#e!Con#ri&'#ion)Rs+

# 2 10 7 1+7 7

= 4 20 7 1 4 4 20 7 , 3

+ta 10 A0 ,8



170/181

8 Beig3te a*erage c+ntri!"ti+n er "nitO +ta c+ntri!"ti+n/t+ta "nits

O 1/10 &s51505

3ere,+re t3e =% "nits i !eOFie c+st/Beig3te c+ntri!"ti+n er "nit

O&s5J5A ak3s/&s5150 O A ak3s5

(r+ss c3eck n+: =% "nits"nit rice O =% saes O&s5AAak3s O &s5 2A ak3s 3ic3 is areay

arri*e at)



171/181

8 3e c+m+site /S rati+n i c3ange3en t3e saes-mi c3anges an s+ t3e

c+m+site =% saes t++5

8 3is ar+ac3 is +ny ar+imate !"t stigi*es a g++ iea a!+"t t3e

c+nse?"ences +, c3anges in t3e saes

mi5

Be 3a*e "se t3e ,++ing ,+rm"ae:

15 /S rati+ O (S- ')/S O /S100 in ercentageE


172/181

25 =% "nitsO Fie +st/+ntri!"ti+n er "nitE75=% Saes O Fie +st/(/S rati+E /S rati+

O Fie +st/=% SaesE

45Fie +st O/S rati+=% saesE

A5+ntri!"ti+n O Saes-'aria!e c+stE

OFie +st T Pr+,it +r /S rati+SaesE

65Margin +, Sa,ety O Saes- =% saes

O(+ntri!"ti+n-Fie +st) (i5e5 r+,it)/(/S) rati+

Pricing


173/181

8 Pricing is a cr"cia ecisi+n . an integraart +, t3e marketing mi managementE

8 Price '+"me an Pr+,it are interreate

an a,,ect r+,itE8 ig3 rice +r 3ig3 "nit r+,it eas t+ +

*+"me +, saes an + a!s+"te r+,itE

8 $+ rice +r + "nit rice eas t+ 3ig3*+"me +, saes an $o/a!s+"te r+,itE

Pricing


174/181

8 Pricing s3+" strike a 3eat3y !aance!eteen marketing an c+st

c+nsierati+ns5

8 ="t t3e reati*e im+rtance +, t3e t+ iargey een "+n: time ,rame market

c+niti+ns rimary marketing +!


175/181

8 #s y+" are aare t3ere are i,,erentar+ac3es t+ ricing:8 ig3 rice an + *+"me *s5 $+ rice an

3ig3 *+"meE8 G+ing rate ricingE8 Seae !i ricingE8 Ge+gra3ica ricingE8 Disc+"nt ricingE

8 Discriminat+ry ricingE8 Penetrati+n ricingE8 Skimming t3e creamE

Pricing


176/181

8 Sn+! *a"e ricingE8 Pre-emti*e ricing E

8 Pr+"ct $i,e yce PricingE

8 Price re"cti+ns ( Price c"tting-Price ar,are-F+rmati+n +, rice carte)

Pricing


177/181

8 +st !ase ar+ac3es:

8 F" c+st ricing . ign+res easticity +, eman

ign+res c+metiti+n n+ istincti+n !eteen ,ie

an *aria!e c+stsE

8 +n*ersi+n c+st met3+: !ase +n t3e *a"eae (.eg5 Printing in"stry)E

8 Margina +st PricingE

8&et"rn +n In*estment Pricing . "se," in a m"tir+"ct c+many +r 3ie intr+"cing ne

r+"cts 3ere n+ market rice eistsE

Pricing


178/181

8 De*e+ing ricing strategies:8 Price !"yer is iing t+ ayE

8 Marketing +!


179/181

8 +n Financia ,act+rs in,"encing Pricing:8 Gr+t3 asirati+nsE

8 +r+rate eansi+nE

8 +r+rate imageE8 & an DE

8 +st an e,,iciencyE

8 "st+mer +ini+nE8 +metiti+n5

Pricing


180/181

8 In e+rt ricing t3e ,++ing c+sts 3a*e t+ !e!+rne in min:8 %-,act+ry rice +, r+"ctE8 +st +, Secia acking i, anyE

8 Insecti+n c3arges t+ %+rt Insecti+n#genciesE8 rans+rtati+n ,r+m ,act+ry t+ are3+"se/+rts

are3+"se rentasE8 earing an F+raring #gents c3arges i, anyE8 P+rt c3arges inc"ing 3aning insie t3e +rtsE

Pricing

8 D+c"mentati+n c3arges !e,+re e+rtsE


181/181

D+c"mentati+n c3arges !e,+re e+rtsE

8 Freig3tE8 Ins"rance Premi"mE8 %+rt D"ties (i, any)E8 Im+rting c+"ntry c3arges in t3eir +rts im+rt

"ties (i, any)E8 earing c3arges at estinati+n an

trans+rtati+n c3arges t+ t3e !"yers,act+ry/are3+"seE

8 #gents c+mmissi+nE

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88226967 Marketing Finance